Capacity was tight for a number of reasons that were well-publicized before renewal. Exchange rate issues caused many British pound-denominated reinsurers (as well as some in U.S. dollars and Euros) to consider (and seek to reduce) their overall accumulations. Reinsurers relying on retrocession protection found that Japanese catastrophe perils had become a major exposure — sometimes to levels deemed too large by their own internal controls or the appetites of the retrocession providers. Offsetting these two negative factors was the increase in pricing that enabled reinsurers with spare capacity to justify deploying it within their own organizations.

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